Sneakers Still Sport a `Made in USA' Label
Most of the US athletic footwear industry is based overseas, but a number of American companies have set out to prove that there are benefits to doing business at home and have no plans to move
WHILE the heart and ``sole'' of America's athletic footwear industry, including giants Nike Inc. and Reebok International Ltd., manufacture their products on distant shores, a handful of companies remain dedicated to manufacturing in the United States.
In the $11.6 billion industry, 85 to 90 percent of all athletic footwear sold on the US market, excluding canvas shoes, is manufactured overseas, says Thomas Doyle, director of information and research for the National Sporting Goods Association in Mount Prospect, Ill.
About five companies still manufacture parts of their lines in the US. That includes firms that design and assemble shoes domestically but use components supplied from overseas, says Gregg Hartley, executive director of the Athletic Footwear Association. The companies include: Vans Incorporated in Orange, Calif., Converse Inc., in North Reading, Mass., Keds Corporation in Cambridge, Mass., New Balance Athletic Shoes Inc., in Boston, and Hyde Athletic Industries Inc., in Peabody, Mass., maker of Saucony athletic shoes.
Athletic shoes still made entirely in the US, such as Vans and part of Converse's line, are made primarily of canvas and rubber, Mr. Hartley says. Since these components are subject to a high import tax, it costs more to make them overseas, he adds.
Contrary to what most consumers believe, the athletic footwear industry never left the US, Hartley says. ``It is not really a case of manufacturing going offshore,'' he says. ``[Offshore] is where the business developed.'' `Made in Europe'
In the late 1960s, the only athletic shoes considered to be manufactured in the US were Converse and Keds, Hartley says. ``High end'' footwear was manufactured primarily in West Germany and Czechoslovakia, he says, because ``the quality of the shoes and the cost to build them were so far ahead of what was being done in this country.''
Nike was the first to make products in Asian factories - China, Taiwan, Korea, and Indonesia. The quality was superior to the products manufactured in Western Europe, and the costs were cheaper, he says.
``That's been the whole concept behind the development of the athletic footwear business as we know it,'' Hartley says.
The advantages of manufacturing in the US include better production and quality control and more flexibility in meeting the sales demands of retailers, companies say. But size, volume of business, and particular ``niche markets'' that companies fill factor into companies producing here, Hartley says.
It is easier for developing companies such as New Balance, Hyde, and Vans to control their inventories and production processes in the US.
But Mr. Doyle argues that companies that manufacture in the US do not have a quality advantage over companies that manufacture offshore, because American athletic shoes that are manufactured overseas are still designed, tested, and modeled in the US. ``The control might be better in domestic production,'' Doyle says, ``but it doesn't necessarily mean the quality is better.''
Companies admit that manufacturing in the US costs more and drives up the price of the product. ``If all athletic footwear manufacturing was moved to the US,'' Hartley says, ``yes, the consumer would pay a much higher price than they're paying now.'' Choosing the US
New Balance produces 75 percent of its products domestically and employs 1,000 workers in four manufacturing plants in the US - two in Massachusetts and two in Maine, says Katherine Shepard, marketing communications manager for the company.
``It is a choice of finding a way to do it,'' Ms. Shepard says. ``It's not necessarily easy and it's not necessarily painless. It's a passion of the owner. He believes in US manufacturing, not only for his business, but for the country.''
While New Balance admits that it cannot currently produce a pair of shoes for less than $50 in the US, it manages to stay close to its competition in pricing. The average price of a New Balance shoe is $65, Shepard says.
Shepard says the majority of costs in manufacturing athletic shoes are not in labor but in materials. Direct labor accounts for 16 percent of New Balance's costs; materials account for 53 percent.
``What you have to do is become smarter in how you buy and use materials,'' she says. ``The other companies could do it [manufacture in the US], but they chose not to. We do it by staying on top of technology.'' Staying profitable
New Balance's computerized technology helps minimize the amount of wasted materials and utilize its workers more efficiently, Shepard says. Updating technology is expensive, she adds, but it enables the company to manufacture domestically. Despite a decline in sales in the athletic shoe industry, New Balance sales have risen in the past year, along with its employee base, Shepard says.
Besides technology, the company emphasizes ``quality-based manufacturing'' and ``workforce empowerment,'' Shepard says. New Balance has done away with the assembly line and instituted manufacturing teams of four to nine workers. Shoes are made one at a time. Workers are paid 70 percent on quality and 30 percent on productivity. The company saves money, he says, because it has fewer defects.
Hyde Athletic Industries Inc., maker of running, walking, tennis, and fitness shoes under the Saucony name, reengineered its plant in Bangor, Maine, to accommodate an increase in volume. The increase came in response to a magazine article in May 1992 giving the company's running shoes a No. 1 rating, says Ken Graham, vice president of manufacturing and development.
Most of Saucony running shoes are manufactured domestically, using components from overseas, Mr. Graham says. Saucony makes up 70 percent of Hyde's overall revenue. The company says it tries to be as competitive as possible in pricing and usually comes within $5 of its competition.
The consumer demand for shoes that are ``made in the USA'' has helped sales, Mr. Graham says, and the consumer is usually willing to pay a slightly higher price.
``I think making shoes here is a very important [selling] point with people when they find that out,'' he adds.